Hiscox reports surge in flooding claims

Hiscox UK has received 112 claims from its household policyholders regarding flooding from recent storms.

The insurer confirmed that 50% of these claims are reinsured through FloodRe, the government-backed flood insurance initiative.

In a statement within its 2019 preliminary results report, published today, Hiscox said: “Some Hiscox UK household customers have unfortunately suffered flooding from the recent storms and our claims teams are working hard to get them back to normal.

“Net losses are well within our expected catastrophe loss budget for the quarter.”

UK figures

In its 2019 preliminary results report, Hiscox UK reported a 3.9% improvement in gross premiums, equating to $746.4m versus $749.6m in 2018. Its commercial business also grew by 9% over the reporting period.

The company further noted that retention was impacted for its household broker business because of pricing action taken in the past 18 months in response to market-wide claims trends, such as the increasing prevalence of escape of water claims. Despite this, Hiscox UK reported a return to profitability in this line.

In terms of Hiscox’s operations in the London Market, the insurer stated that it has been affected by catastrophes and property claims, yet market conditions are improving.

Hiscox Syndicate 33 has increased its capacity by 19% in order to take advantage of any opportunities for profitable growth in 2020. Its rates have also increased for the third successive year across 14 of its 15 lines.

The company additionally earmarked cyber as a growth area – it launched its CyberClear product in this reporting period in recognition of this trend.

Group-wide results

Across the wider Hiscox group, gross written premium (GWP) increased by 8.1% to total $4,030.7m in 2019 compared to $3,778.3m in 2018.

Its net premiums earned amounted to $2,635.6m and profit before tax stood at $53.1m at the end of 2019. The group combined ratio was reported as 105.7%, an increase from last year’s 94.9% combined ratio.

Hiscox revealed that its group profits were impacted by large catastrophic events - $165m was reserved for Hurricane Dorian and Typhoons Faxai and Hagibis, for example, in addition to $25m of reduced fees and profit commissions.

Hiscox’s retail arm has improved profits by 22% to $178.4m, with a combined ratio of 98.7%.

Reserving is a focus for Hiscox moving forward. The report stated: “We seek to reserve cautiously, and our reserves are set at 9.4% above actuarial estimates. We expect that we will return to our more normal pattern reserve releases of 9% to 12% of opening reserves over the next three years.

“In 2020, we expect reserve releases to be between 3-5% of opening net reserves, returning to our normal pattern over the next three years.”

“Our growing retail profits and strong investment return has enabled us to weather a third consecutive year of storms.

“We are investing for growth as we look to capture the many opportunities we see ahead.”

People driven

This year, Hiscox has confirmed that it will develop a new UK location strategy as its lease at 1 Great St Helen’s is soon coming to an end; the insurer therefore plans to review its UK footprint to help reduce costs.

The report announced: “Over the next two or three years, we will move up to 300 roles out of London to join the 750 Hiscox employees already working in other locations across the UK.”

Coronavirus impacts

Despite widespread conversations about Coronavirus across the market, Hiscox said that it is too early to estimate the impacts.

“The main areas of potential exposure for Hiscox are event cancellation, travel and personal accident cover and we have received notifications of small claims to date,” the report read.

“Pandemic is covered in a very small part of the portfolio where we have very controlled net exposure.”